One opinionated New Yorker's thoughts on the good, the bad, and everything in between on the New York theatre scene.

Thursday, November 10, 2011

Will It Recoup?

Fair warning: I'm about to get pretty "industry insider" on you guys right now. Not so much in that I'm going to be using a bunch of pretentious terms you don't know, but because the topic I'm going to discuss doesn't really come up outside of industry newspapers and websites like Playbill.com.

That subject, boys and girls, is when a major Broadway musical manages to recoup its investment costs and therefore start turning a profit. The reason this topic fascinates me is because it is not a straightforward result of popularity or the length of the run (although those things obviously come into play). Some shows manage to recoup their investment within the space of a year, and others run for years without making back their initial costs.

For example, The Addams Family, that veritable punching bag of the 2009-2010 Broadway season, will be closing this Christmas. By the time it's gone, the show will have run for nearly two years. Furthermore, for the first six months of that run, it did nearly sell-out business and made over $1 million a week. And yet, the show still won't have turned a profit by the time it closes, due to its high initial capitalization and what must amount to high weekly running costs (something tells me Nathan Lane and Bebe Nueworth did not come cheap). Meanwhile, there are shows like the 2009 Hair revival that manage to make back their money in as little as 5 months.

I would argue that moreso than the initial cost, the thing that really makes or breaks a show financially is the weekly running cost. It costs money to pay the actors, musicians, and stagehands, not to mention maintain the props, costumes, and sets while also paying rent on the theatre and the monthly power bill. And since even the biggest theatres can only cram in about 10,000 people during a typical 8 show week, that means a very finite amount of earning potential for even sell-out shows (and this is assuming everyone pays full price for their tickets, which pretty much never happens). If the weekly costs aren't kept in check, your show is going to have a tough time turning a profit even if it runs for years, since they amount to additional money being spent on top of the initial capitalization. It's basically like trying to pay off a credit card while continuing to make charges on it; the more you "charge" in weekly running costs, the longer it will take to pay the balance down to zero.

So in the spirit of this fascinating (to me, anyway) subtopic of the theatrical business, I wanted to play a little guessing game about which of this season's musicals will actually turn a profit and prove financially successful. I'm going to focus on the musicals because they: a) cost more; b) are more likely to be commercial runs instead of not-for-profit productions that aren't actually concerned with making money. So let's take a look at the first 5 musicals opening on Broadway this season, starting with Broadway's other favorite punching bag, Spider-Man.

(Note: This may or may not be an attempt to salvage an article written for a certain nameless website who decided not to run it at the behest of their marketing department, after I had put in a lot of time and energy to write it. Just sayin'.)

Spider-Man:Turn Off the Dark

Yes, it’s been running for almost a year, but Spider-Man is technically part of the current Broadway season due to its mid-June opening.This famously troubled musical is the most expensive in Broadway history, with a whopping $75 million in initial production costs (for comparison, Wicked cost “only” $14 million).That hefty price tag, combined with the critical lashing the show received, led many to predict the show’s early demise.But ticket sales have remained strong throughout the fall, and the show regularly grosses over $1 million a week.

Will It Recoup?No.Despite steady box office returns, there’s almost no chance of Spider-Man turning a profit.In addition to its astronomically high initial capitalization, the technologically advanced show spends almost $1 million a week paying salaries, power bills, and maintaining sets and costumes.Spider-Man would need to continue its current earning patterns for five to seven years before it begins making money, something that seems incredibly unlikely.Only 15 musicals in history have run for that long, with recent megahits like The Producers and Hairspray only managing six year runs.

Follies

One of the many attractions of the critically lauded revival of Stephen Sondheim’s groundbreaking 1971 musical Follies is the fact that the show is a fully staged production.The large-cast, costume-heavy musical is usually performed in scaled down concert versions due to its prohibitively expensive production costs (the original production was at the time the most expensive Broadway show in history, with an $800,000 capitalization).In this era of bare bones revivals and smaller scale new musicals, the show’s 41-person cast and 27-piece orchestra seems particularly extravagant.

Will It Recoup?Probably not.The weekly running costs (including actor and musician salaries) are just too high.Box office returns have been strong enough to prompt a three week extension of the show’s limited run, but Follies is also one of the few new productions currently open.The glut of show openings in late October and November will surely steal some of Follies’ box office thunder, but if strong word of mouth continues to drive business there’s a possibility of a second extension which would increase its chances of recouping.

Godspell

This staple of high school and community theatre is prepping for its first Broadway revival, and its financial prospects are particularly up in the air.The show does have a pre-established brand that’s familiar to the tourists who drive a large percentage of Broadway ticket sales, and being from the same composer as Wicked certainly won’t hurt.In fact, the revival’s location next door to the Witches of Oz may make it an ideal alternative to those unable to score tickets to the perpetually sold-out hit.

Will It Recoup?The chances are 50/50 on this one.Popular regional shows do not necessarily set New York box offices on fire, and people may wonder why they should spend $135 to see something they could view for significantly less back home.But with a 10-person cast and a small venue like the Circle in the Square Theatre helping to keep running costs down, the show shouldn’t need to sell-out every night to remain financially viable.With some good reviews and positive word of mouth, it could easily run for a year or more, which is likely all it would need to turn a profit.

Hugh Jackman: Back on Broadway

Although not a musical in the traditional sense, this solo concert featuring one of Hollywood’s A-list stars qualifies as one for our purposes.Headliner Hugh Jackman has been on Broadway exactly twice, and both times his presence has translated into box office gold.In fact, Jackman was such a strong draw that both productions couldn’t continue without him, and The Boy from Oz even elected to temporarily shutter for a week during Jackman’s scheduled vacation rather than try to sell tickets without him.

Will It Recoup?Yes.Jackman’s Broadway concert already has a reported $6 million in advance ticket sales, cementing the Tony-winner’s status as a proven box office draw.Even with Jackman’s star salary – which could easily be $100,000 a week or more – and an 18-piece orchestra to pay, running costs for a concert like this are comparatively low, making this one of the surest financial bets of the season.

Bonnie and Clyde

Frank Wildhorn must be a glutton for punishment.Just six months after the critical and financial disaster that was Wonderland, Wildhorn is back with a new musical based on two of the most notorious outlaws in American history.Helping this show’s financial viability is an intriguing subject matter that seems ripe for musicalization, and the large number of diehard fans of Wildhorn’s previous works.Of course, the same could have been said about Wonderland, and that barely lasted a month.

Will It Recoup?No.There are just too many factors working against it.Despite two well-reviewed out-of-town tryouts and two well liked up-and-comers in the lead roles (Laura Osnes and Jeremy Jordan, respectively), chances are Bonnie and Clyde will be ripped to shreds by New York critics, who have historically lambasted Wildhorn’s shows.And even the composer’s biggest hit, Jekyll & Hyde, failed to turn a profit despite nearly four years on Broadway.Given the current economic climate, Bonnie and Clyde can hardly count on a run that long, making the show’s financial prospects grim.

That's all for now. I hope to make this a recurring article, so look for another installment as we get closer to more show opennings. :-)